Saturday, July 21, 2007

Moratorium Logging Now

Rully Syumanda
11 April 2007

Save the Forests with your Hands

Proposal for Execution of the Government of Indonesia’s Commitment to Save Remnant Tropical Forests (Indonesian Forum for the Environment, WALHI), May 2007

During 2007, the proposed Moratorium on Logging has been the most-discussed policy anticlimax in the forestry sector. A number of key government officials themselves described a moratorium on logging as the best way to avoid a range of disasters and negative impacts caused by extractive industries in the forestry sector.

When WALHI first proposed a Moratorium on Logging in 2001, we immediately considered the pros and cons. With forestry businesses providing direct benefits to 2.8 million householders and yielding 9 billion dollars in foreign exchange, a Moratorium on Logging would surely contain some economic threats.

By definition, a Moratorium on Logging is the temporary cessation of logging and forest conversion activities. Its objective is to provide some leeway regarding problems in order that a long term and permanent solution be found.

A Moratorium on Logging must be applied for at least fifteen years. Before the end of this period, an evaluation is carried out to re-assess the situation. A fifteen year period is considered sufficient to improve all conflicts in management and policies that often had to be resolved in the field. Fifteen years is also regarded as adequate time to formulate: (1) a protocol for conflict resolution; (2) a standard for ecological service in plantations; and (3) the conceptualization of a community forest system as the standard policy for forests in Indonesia.

Why must there be a Moratorium on Logging?

A Moratorium on Logging is the most sensible choice. Every year, 2.72 million hectares of Indonesian forests are lost. Each minute, an area as large as five soccer fields is destroyed, equivalent to the loss of a forest the size of Bali each year. Considering that just 41.25 million hectares of remaining Production Forest reserves have good forest cover, that the supply of timber inputs from industrial plantations are only sufficient to fulfill the needs of the pulp industry, and that bio-fuel will stimulate acceleration of zoning for oil palm plantations, it is estimated that the natural forests in Sumatra, Kalimantan and Sulawesi will be extinct by 2012. The price of timber these islands, including Java, will escalate dramatically because all timber will have to be shipped from Papua. In 2022, all natural forests in Indonesia will be extinct and the price of timber will climb once again because wood will have to be imported from China and/or Vietnam.

Acceleration in development of Community Forests could indeed suppress the rate of logging. However, if Community Forests are established in 2008, yields will only be realized in 2016, by which time the natural forests of Sumatra, Kalimantan and Sulawesi will already be extinct, following the footsteps of natural forests in Java.

Various initiatives, like FLEGT, are unable to suppress the rate of destruction because FLEGT is administered by the European Union and only regulates law enforcement, management, and timber trade destined for Northern countries. FLEGT never addresses the fundamental roots of forestry sector problems, namely, acknowledgement of community rights, corruption, and the large discrepancy between supply and demand in the forestry industry. Moreover, FLEGT does not address the pattern of consumption in Indonesia, which is the critical factor spurring accelerated deforestation.

Initiatives, such as certification, will do nothing to resolve the problem if they continue to be voluntary. The Green Label applied to forestry products has in practice provided no added value to sold products, though this was the theoretical objective. The communities of consumer countries like Europe, Japan and China, in reality care little whether the timber they buy is derived from a sustainable source or not. Lower price is still the main choice of consumers in these importer countries. Also, certification can cast a false illusion of sustainable forest management, and can shift the focus from the real fundamental problems. This does not mean that campaigns for the use of materials from sustainable sources must be stopped, nor that consumption of raw timber materials must be stopped. However, even if these objectives are achieved, we will still be faced with extinction of Indonesia’s natural forests.

These concerns arise from the realities of forestry industry itself. The rate of illegal logging in 2006 was greater than 19 million cubic meters, causing a loss of Rp 22.862 trillion rupiah. This figure is slightly less than the foreign exchange obtained from forestry exports, excluding pulp, which only reached Rp 29.536 trillion. However, if we add the direct losses from flooding and landslides in the same year, which cost Rp 8.158 trillion, total losses come to Rp 31.020 trillion.

In sum, the forestry industry contributes Rp 1.484 trillion to the national foreign account deficit each year. This excludes losses from timber smuggling, costs of conflict, and the ecological value of forest resources.

Solving the problems of the forestry sector will not be easy. Anti-poaching operations have addressed less than 8.7 percent of illegal logging, and the operational costs of these programs are not trivial, though far less than the losses caused by poaching activities themselves, which extend beyond the timber smuggling problem.

Efforts to revitalize and restructure the industry conflict with attempts to increase industrial capacity. After the auditing of industries, for which results remain unknown, the government increased the pulp production capacity in Sumatra. In addition, they plan to build pulp industries in Kalimantan and Papua.

In sum, many agendas diverge in the forestry sector. On the one hand, problems of disaster and conflict incur large costs. On the other hand, there is a push to continue extraction to fill foreign exchange reserves and pay off debts in industries accountable to the National Banking Restructuring Agency.

This has led to regency-level development/growth of industry that the central government may have incomplete information about or may be unaware of, such that forestry development planning can only be based on assumptions. Working out solutions for forestry sector development fails to take three basic issues into account: (1) lack of acknowledgement of people’s rights; (2) corruption; and (3) a huge discrepancy between supply and demand in the timber industry.

A Moratorium on Logging was taken up as an alternative because of the many interests requiring some form of improvement. The large number of agendas made it difficult to find a single solution. Through a moratorium, all of these agendas can be put on hold so that overlapping problems in administration and policy can first be improved.

The same goes for conflict resolution. The regulation of standards related to permits and the system of community forest management can be reviewed more clearly.

The Benefits of a Moratorium on Logging

A Moratorium on Logging will have multifold benefits in improving management of forest resources and the sustainability of the timber industry, including:

a) Provide the natural forests with political and ecological space in which to ‘breath’ and halt the continuing destruction of tropical forests in Indonesia;

b) Provide the best opportunity to monitor timber-tracking and log-auditing activities, as well as to catch illegal logging using satellite monitoring technology;

c) Provide an opportunity to restructure the forestry industry and tenurial rights to forest resources, and to increase the yields of non-timber forestry resources;

d) Correct domestic timber market distortions by opening the tap on imports as wide as possible, so that domestic timber market prices become comparable to world log prices;

e) Through the market mechanism, conduct restructuring and industrial rationalization of timber processing and correct excessive industrial capacity: only industries that carry out business genuinely and competitively are allowed to continue their enterprises and those dependent on illegal timber supplies will be unable to compete;

f) Through the market mechanism, force timber processing industries to improve the efficiency of their raw material usage; and

g) Through the market mechanism, encourage pulp industries to seriously establish plantation forests.

Losses if there is no Moratorium on Logging

Indonesia will suffer huge losses in the future if a moratorium on logging is not put in place now, including:

a) The Government will be unable to effectively monitor illegal logging activities;

b) Market distortions will be uncorrectable and wastage of logs will continue;

c) No incentive for industries to improve the efficiency of their raw material usage or to import more;

d) Pulp industries will continue to postpone development of plantation forests and will further destroy the natural forests;

e) The forestry industry’s deficit of Rp 1.484 trillion per year from illegal logging and disasters will be unstoppable;

f) The lowland forests in Sumatra will be lost by 2009, lowland forests in Kalimantan lost within the next five years, and lowland forests of Papua will be lost within the next fifteen years;

g) We will lose the basis of non-pulp industries, which would otherwise contribute US$ 4 billion in future foreign exchange. With the forests gone, hundreds of thousands of workers in this sector will lose their jobs in the next seven years.

The Government of Indonesia’s Commitment to Forestry Reform

At the ninth CGI meeting from 1-2 February 2000 in Jakarta, the Government of Indonesia via the Minister for Forestry and Plantations declared eight government commitments during the forestry session, as follows: (1) a moratorium on the conversion of natural forests; (2) closure of debt-laden industries; (3) elimination of illegal forest logging; (4) restructuring of timber processing industries; (5) recalculation of the value of forest resources; (6) linkage of reforestration programs with industrial capacity; (7) decentralization of forestry administration; and (8) formation of a national forestry program.

In its November 2000 action plan, addenda to these commitments included: (9) tackling forest fires; (10) restructuring tenurial rights; (11) taking inventory of forest resources; and (12) improving the forest management system.

The twelfth step would entail fundamental change in forest resource management to become more sustainable. To execute its commitments, the Government of Indonesia formed an Inter-Departmental Committee on Forestry through Presidential Decree No. 80/2000 on 7 June 2000, responsible for coordinating and implementing all government commitments in the forestry sector.

Stages of the Moratorium on Logging and Implementation of Forestry Reform

The Moratorium on Logging is merely a process, and not the end goal. It offers an opportunity to carry out reform planning and implementation of government commitments in the forestry sector. The Moratorium on Logging is also the initial step for these reforms.

Steps of the Moratorium on Logging could be implemented over three years in the following stages:

Stage I: Stop the issue of new permits

A stop on the issue or renewal of new forestry concessions, work contracts, and plantation permits, as well as releasing an import policy for the timber processing industry. A moratorium on permits is an absolute requirement of, and simultaneously the first stage in, the implementation of a Moratorium on Logging in Indonesia.

Reform commitments performed at this stage could include commitments #1 (a moratorium on the conversion of natural forests) and commitment #10 (restructuring of tenurial rights).

Stage II: Thorough evaluation of forestry industries’ performance

Within 2 months of the Moratorium on Logging being implemented, a stop on forestry concessions would cause problems, primarily for those whose credit will be disrupted and who are handled by the National Bank Restructuring Agency. Debt must be repaid by the owners and law enforcement applied to problematic industries if necessary. At this stage, evaluation of the assets held by problem industries must be carried out through independent third parties as due diligence.

At this stage, the Government could implement commitment #2 (closure of debt-laden industries) and commitment #5 (recalculation of the value of forest resources).

Stage III: Salvaging the most threatened forests

Within 6 months, the Government must stop all timber logging in Sumatra and Sulawesi, the two islands on which forests are most threatened, and restructure the forest areas in Sumatra and Sulawesi, as well as managing social problems that have arisen as a result of the Moratorium on Logging by re-employing workers in tree-planting and forest monitoring projects, such as has been done in China.

During this third stage, the Government could perform commitment #4 (restructuring the timber processing industry); commitment #6 (linking reforestation programs with industrial capacity); commitment #7 (decentralization of forest administration); and commitment #3 (stop on illegal forest logging).

Stage IV: Temporary stop on all forest logging and resolution of potential social problems

Within one year of the Moratorium on Logging being implemented, the Government could stop all timber logging activities in Kalimantan. Handling of social problems that have arisen so far and during the Moratorium on Logging could be carried out through a national policy, while a Protocol for Conflict Resolution and Standard for Ecological Service needs to be developed for regional areas as a forum under ongoing development.

During this period, the Government could also formulate a policy that provides incentives to development of downstream industries for superior commodities, which aim to absorb the workforce from the forestry sector while simultaneously contributing added economic value.

During this stage, reforms could be implemented that carry out commitment #12 (improving the forest management system) and commitment #8 (formation of a national forestry program).

Stage V: Temporary prohibition on forest logging throughout Indonesia

Within 2-3 years: a stop on all timber logging in natural forests for a stipulated period throughout Indonesia. During this period, logging would only be permitted in plantation forests or forests that are managed by local communities.

During this stage, the Government could carry out commitment #9 (tackling forest fires) and commitment #11 (taking inventory of forest resources).

During the Moratorium on Logging, timber industries could continue to operate by importing timber raw materials. Continuing to use timber raw materials from domestic sources would essentially be suicide. To facilitate monitoring, the types of imported timber should be different to timber types available in Indonesia.

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